Question

For the cash flow diagram shown in Figure P2.7, determine the following

a. The equivalent present value at year 0

b. The equivalent future value at year 10

c. The equivalent uniform annual value

For the cash low diagram shown in Figure P2.7, determine the following a. b. c. The equivalent present value at year 0 The equivalent future value at year 10 The equivalent uniform annual value A1 = $110,000 $12,000 -12.5% 10 G- $2,800 A = $3,500 $150,000 Po = $200,000 FIGURE P2.7

Answer 1

	Year	0	1	2	3	4	5	6	7	8	9	10
	Cf-1	-200000
	CF-2		110000	98222.22	86444.44	74666.67	62888.89	51111.11	39333.33	27555.56	15777.78	4000
	CF-3		0	-560	-1120	-1680	-2240	-2800	-3500	-3500	-3500	-3500
	CF-4							-150000
	CF-5									12000
	Net cash flows	-200000	110000	97662.22	85324.44	72986.67	60648.89	-101689	35833.33	36055.56	12277.78	500
	Interest rate	12.50%
a	PV at year 0	98,101.52	Using NPV formula
b	FV at year 10	-649464.2051	317515.8	250580.2	194599.2	147964.9	109291.3	-162886	51020.51	45632.81	13812.5	500
	Net FV at year 10	318,567.12	Sum of all the future values
c	Equivalent Uniform annual value	17,719.27	Using the PMT function and PV as the one calculated above and rate as 12.5%